When the music stops, in terms of liquidity, things will be complicated. But as long as the music is playing, you’ve got to get up and dance. We’re still dancing.

Bear Stearns was the canary in the coal mine for Wall Street.  The near bankruptcy of the 85-year old firm hinted at the massive rot hiding within the American financial system in early 2008; it was largely swept under the rug and the status quo was maintained for a few months.  Lehman Brothers was the pin that burst the bubble.  The bankruptcy of the keystone firm forced governments around the world to spend hundreds of billions of public funds to save economies and markets from implosion.  Catastrophe was avoided, but economic and political fallout continues.  It was only last week that Greece’s fiscal situation, its true state exposed after accounting trickery aided by financial firms came to light, threatened to destabilize the euro region.  Politicians are playing the blame game, regulators are scrambling to regulate, but the horse has long left the barn.

The question is whether the governors of football are wise enough to draw the parallels between the financial debacle and circumstances in the Premier League.  The first club in the history of the top flight entered administration earlier this year.  The implosion of Portsmouth was the league’s Bear Stearns moment; so far the response has been disappointingly similar to those of national governments in the middle of the financial crisis.  Tamp down the mess, resume business as usual and hope that all will be fixed through the magic of markets.  Unfortunately, history has shown us that eventually the music must stop, and when it does nobody in the room is getting a chair.  In financial terms Portsmouth is one of the smaller clubs, but the conditions leading to its downfall are common among almost all the clubs in the league.  If a Lehman Brothers-sized football club implodes the damage to the Premier League members will be far beyond imagining.  The cost of triage is always more than the cost of prevention.

But the weight of inertia is stifling, the longing for a return to the old normal is a blaring siren song playing over the calls for change.  The final fixtures of the season were only last weekend and speculation has already started of massive transfer spending plans at Manchester City, Tottenham, and a host of other clubs.  Contrast the spending plans with reports of record losses across the league and the condition schizophrenia rightly comes to mind.  Multiple entities within the same body, none aware of the activities of the other, all engaging in uncoordinated action, that wastes time and energy to the detriment of the host.  This fragmentation has resulted in clubs that are overleveraged, owners speculating in bubbly asset markets, and no understanding of how quickly the system could unravel, much less the consequences of such a change.

More than people buying overpriced houses, more than banks selling valueless financial products, more than any other factor complacency was at the root of the financial debacle.  Passive leadership allowed the financial bubble to grow and ignored calls to set the system right when time and money were plentiful.  A vacuum of political will allows that disastrous leadership to continue and it is the same absence of active leadership which is now feeding the bubble in football.  The league has trapped itself in a cycle of mania and depression because it human nature to defer change and the pain that comes with it.  New leaders are needed now to wrench the business of football from the cycle, to enact strong regulation of club finances and bring sense to the league.  Emotional turmoil is rightly part of the game but it should not be part of the business and the lessons, which others have learned at great cost, should be taken to heart sooner rather than later.